ING CFO to step down after money laundering fine

Dutch banking giant ING last week agreed to pay €775 million to settle a criminal investigation over money launderingPhoto: AFP

ING ousted chief financial officer Koos Timmermans after the Dutch bank paid one of the biggest fines ever given to one of the country's lenders in a criminal case related to money laundering.

The search for a successor has started and Timmermans – a 22-year ING veteran – has agreed to remain in his position until the completion of the succession process, the Amsterdam-based bank said on Tuesday.

During part of the period under investigation, he was responsible for the bank's Dutch unit, which was at the centre of the probe.

Shareholder advocates, politicians and clients are putting the bank and chief executive officer Ralph Hamers' leadership under pressure after the lender agreed last week to pay €775 million to settle the Dutch investigation into issues including money laundering and corrupt practices by a former client.

According to the public prosecutor, the Amsterdam-based bank systematically failed to detect unusual payments as it under-invested in compliance.

"We deeply regret the shortcomings found and take this matter very seriously," chairman Hans Wijers said in a statement. "Given the seriousness of the matter and the many reactions among stakeholders since the announcement and in the interest of the bank, we came to the conclusion it is appropriate that responsibility is taken at executive board level."

The investigation and fine have caused uproar in the Netherlands, coming just months after the bank had to backtrack on a pay rise for Hamers.

The tumult surrounding the bank increased further last week after Dutch daily Het Financieele Dagblad said that the bank had signalled to managers that information technology and working system problems could threaten its business.

"This resignation is likely to ease pressure on CEO Hamers to step down but do note ING's management board has seen some changes over the years," Robin van den Broek, an analyst at Mediobanca, said by email.

"Koos is someone with quite a bit of experience within the company and a strong successor will be important."

Bad news

The cascade of bad news drove the stock to a two-year low on Friday. The shares are among the weakest performers among Europe's battered bank stocks this year, down almost 27%, and were trading 0.2% higher at 11.2 euros as of 9:06am in Amsterdam

Timmermans joined ING in 1996 and was a member of the executive team since 2007 when he was appointed as the company's first chief risk officer on the executive board.

In 2011 he became vice-chairman of the management board for banking. He was appointed chief financial officer in 2017.

The Dutch investigation focused on the bank's role in matters including unusual payments by VimpelCom to a company owned by a Uzbek government official.

ING was suspected of failing to report unusual transactions or not reporting them in time.

VimpelCom, which has changed its name to Veon, pleaded guilty in 2016 to violating US corruption laws and agreed to a $795 million (€685 million) settlement with US and Dutch authorities in a case related to its subsidiary in Uzbekistan.

ING acknowledged "serious shortcomings" in executing customer due diligence policies to prevent financial crime at its Dutch unit from 2010 through 2016. Dutch finance minister Wopke Hoekstra has called the case "extremely serious" and demanded an explanation.

The latest critic is ING's home city of Amsterdam, whose finances the bank has handled since 1917.

The municipal government is putting the contract out to tender early, citing the money-laundering scandal as well as dissatisfaction with an earlier proposed pay increase for Hamers.

Het Financieele Dagblad also reported last week that said ING's own managers are worried about critical technology problems.